DO YOU KNOW HOW YOUR CUSTOMERS MAKE PURCHASING DECISIONS?
HIDDEN SALES TRENDS
BUYER GROUP TRENDS
Combining the ‘Art’ of Merchandising with the ‘Science’ of Analytics, advanced analytics and consumer demand modeling optimize product prices
TRADITIONAL PRICING MODEL
Traditionally retailers used a “Cost-Plus” model for pricing products. If the retailer purchased a jar of peanut butter for $1, they charged the consumer $2 for the jar of peanut butter. The margin was determined in hopes that the revenues would cover expenses and provide a profit for the company. In some, slightly more sophisticated organizations, the margin was set differently based on the product category, KVI or type. The price did not reflect competitors’ prices, brand, consumer demand, the prices of complimentary items or substitutes, simply because that data was not available or usable.
RACE TO THE BOTTOM
As retailers began to loose customers to a growing number of competitors, many of whom offered every day low prices, they felt the pressure to compete on price. The pressure has only increased in recent years as more and more retailers are moving offerings online, lowering their costs, and passing those savings on to their customers with even lower prices. Retailers trying to combat this trend, began to gather competitive prices of their biggest threats. The resulting data was fed into tools which enabled the company to make sure that their price was within a required range of their competitors prices. But, this model still has flaws. It does not directly take into account consumer demand, product/brand value, complimentary or substitute goods, and it forces industry wide prices lower and lower. At some point this will be unsustainable, and retailers risk going out of business.
THE AGE OF PRICE OPTIMIZATION
Now is the age of price optimization. Price optimization takes consumer buying behavior, puts it through a litany of complicated mathematical, scientific, and economics-based algorithms and analysis to determine the optimal prices for each of your products in order to increase profit overall. Price optimization is not new. Pricing industry, research, and knowledge is several decades old, and has been successfully implemented time and time again. But until now, it has been reserved only for the retailers with big budgets. Global pricing solutions offers a suite of price optimization and competitive pricing tools and a host of available services to help small, medium and large companies make informed pricing decisions, and reap the rewards.
OPTIMIZE YOUR PRICES AND INCREASE YOUR BOTTOM LINE
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